The arrival of 3G cellular broadband and the uptake of Internet Protocol (IP) networks have turned digital convergence into reality. But to turn this technology into profits, telecommunications companies need to stay tuned to their customer needs.

According to Garry Foster, national director of technology, media and telecommunications, Deloitte & Touche in Toronto, convergence can too easily become the software engineer's folly, where technical possibility is confused with commercial profitability.

Convergence must be underpinned by well-defined, well-understood and well-established customer needs, says Foster in a recent Deloitte report titled, 'Digital Convergence: The Trillion-Dollar Challenge.'

He says corporations spend vast sums of money to develop technology that either has no commercial application, or is introduced before the market is ready for it.

The company has to interact with its consumers, says Foster. "I'm always amazed to see some technologies that companies develop. While great [as] technology, [they are] not what the customer wants."

Foster says Voice over IP is the most profitable commercial application of convergence to date, with analysts predicting trillions of dollars in revenue by 2010.

And the technology possibilities are only just beginning, with concentrated innovation in IP applications and networks.

For instance, Bell Canada recently unveiled its 3G evolution data optimized network (EV-DO), which offers cellular broadband speeds of up to 2.4 Mbps (average 400 to 700Kbps).

As well, Bell announced the opening of its Advanced Solutions Innovation Centre in Ottawa, for research and development partnerships with Mitel, March Networks, NewHeights and Ubiquity Software. The center is aimed exclusively at fast-tracking the development of custom new IP-based products.

Ericsson Canada and Rogers Communications are currently running trials of another version of cellular 3G, called high-speed downlink packet access (HSDPA), as well as of converged IP multimedia subsystem (IMS) applications.

Rogers and Ericsson say their cellular speeds will jump from the current average of 300-400 Kbps to 2-3 Mbps, peaking at 14.4 Mbps.

These technologies are unearthing a plethora of new product possibilities, according to the report. High revenues are forecast from IP appliances such as digital music players, home entertainment services, home video phones and enterprise collaboration services, as well as IP television, mobile phone content, networked games and online music.

Bell's Personal Communication Manager software application, for example, provides IP telephony capabilities that can be integrated with Microsoft Outlook, Live Communication Server and Messenger software for collaboration in remote computing.

Developed at the Ottawa innovation center, the product is built on NewHeights Software's Desktop Assistant 90, which also helped launch Mitel's Your Assistant collaboration application.

Foster maintains that for convergence to succeed, it must offer customers more than what is already available in separate, non-converged offerings. Products must offer new or enhanced features that are truly useful, with greater convenience and ease of use.

Mobile video telephony is a good example of technology gone commercially awry, says Foster. While it's a remarkable achievement, cellular television has been a commercial disappointment, with few customers tolerating the compromises in video and audio quality.

"They're selling 70-inch televisions and then I hear they're starting to push video on to a two-inch by two-inch screen on your cell phone," says Foster.

"Maybe I'm missing something here, but how can you have the same experience on both? Companies have to watch out if they're developing technology for technology's sake, or if they're addressing their market, meeting their customers' needs."

Foster says one company that has excelled in controlling the convergence of technology is Waterloo, Ont.-based Research in Motion Ltd. (RIM), which manufactures the BlackBerry mobile communication device.

RIM could have taken a lot of things -- an MP3 player or a camera -- and put them into its device, says Foster. But RIM has focussed on its market, business executives who really want contact with their e-mail, and has stayed true to its convictions.

"At some point RIM might come up with the BlackBerry Junior for kids and it probably will have different features then, but the ones it has right now are the features RIM's customers need, and the company just keeps focussing on enhancing those features. I think it's critical companies deal with that."

If you build it, they won't necessarily come. People are not going to come if there's no commercial reason for it, and sometimes, says Foster, companies just don't think through that.